Yes, what is my position? Does he have a claim over the shares? If yes, what should I do to get rid of him?
So there are 2400 shares. He paid £1000 for 1000 but doesnt have them?
Is any of this in writing? How is he trying to screw you?
We need full background please. Thanks
I am the MD of the company. When I incorporated the company there was 1200 shares in the company. I then signed an sh01 to increase the share capital by 1000 shares to 2200.
Last Friday he said that he had lost faith in me and the business and said he "was out...game over."
He put 1000£ into the business account on the Wednesday before he said he did not want to continue with the business.
When I heard on friday that he no longer wanted to continue, I forward dated my annual return to reflect that I owned all of the shares in the business.
No, none of this is in writing regarding the shares, he just transferred the money. I have not issued a share certificate or anything like that to him. Nor is he a registered director on companies house.
I believe he is trying to screw me because he does not want to continue with a business but is trying to get a 45% shareholding in the company and hence would make him amenable to 45% of the companys future earnings.
He emailed me this morning in a very hostile expressing that he is now a shareholder in the business due to transferring the 1000£. Is this the case?
I am afraid this isnot an instant service because we all have clients and court and travelling andother users and weekends. Sometimes you will get a reply in minutes. Sometimesit may be hours.
Why dont you simply give him his £1000 back? Why dont you want him to have shares?
no problem at all. never used service before so apologies.
please get back to me at your convenience.
No worries. The site makes people think they get an answer in nanoseconds!
The site is hpsted in US and I am in Cheshire
Why dont you simply give him his £1000 back?
Why dont you want him to have shares?
If I gave him the £1000 back, could he reject it?
I don't want him to have the shares as he does not want to continue with the business and I don't want him to be able to sit back and earn money from future business earnings when he is not willing to do anything to contribute.
Would there be any benefit to me as the sole director in closing the ltd company and re incorporating a new company under a different company number as the business is not trading yet? or would that be too harsh a step to take?
What would you recommend?
There are a lot of different scenarios andoptions.
Firstly, £1000 is not worth arguing over incourt because he will not get his legal costs back even he wins.
If you have his bank details, you can alwayssimply send his £1000 back.
You can send him a cheque and see if he sayshe wants the shares instead.
However, there was clearly an agreement forhim to buy shares in the company and he paid you the money in that respect. So,whilst he may not yet have the shares, I think you are contract actually boundto let him have them.
If you do not, you are in breach of contract.
If you are in breach of contract he isentitled to damages/compensation. To get damages/compensation. He has two ofsuffered loss.
At this stage, the business is not tradingand therefore makes no profit and the chances are that the shares would beworth less than £1000.
At this stage, I think the maximum he couldargue that he is lost as a result of your breach of contract is £1000.
However, you need to be aware of what rightshe has as a shareholder.
He is entitled to dividends and share ofprofits. Of all the company income goes to pay director's salary (yours) thenthere will never be any profit and there will never be any dividend and whilsthe may own a substantial percentage of the company, it will never be worthanything unless in years to come, it floats on the stock exchange or suchlike.
The other thing, the last thing an investorwants to do, is being business with someone who does not want them.
If he were asking me the same question, Iwould telling to take the thousand pounds and walk away.
You can issue more shares. But you have tooffer them to him in the same proportion that you and him own now and it wouldmean him buying more in order to keep his percentage.
The company has not traded and thereforethere is no conflict (that would be financially worth arguing over) if you setof another company doing the same thing.
To be honest, I would be inclined to send acheque for his thousand pounds, Mark the letter without prejudice save as tocosts, and tell him that you have simply changed your mind, and there is hismoney back. If he feels differently, he should take you to court.
If he does, you will have to defend hisproceedings. Remember that even if he wins, he will only get back what he haslost which at this stage is not a lot and he will not get his legal costs paid.
Can I help further? Please bear with metoday because I will be online and off-
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